Be Water, My Friend ---Bruce Lee

Jung's Wisdom

Part of man is beyond space and time. Look forward to the adventure.

Have a Relaxing Weekend

Nice water features at this botanical garden.

Letting off Steam on a Friday

Jan Hatzius, Chief Economist at Goldman Sachs

Here is a link to a video interview. Hatzius is one of the powers that be.

http://www.youtube.com/watch?v=tbduexTH_V8

Deficit hysteria will kill Europe « Political Economy 101

Deficit hysteria will kill Europe « Political Economy 101

Parenteau's 2006 Paper at Levy Institute and 2010 article on Financial Balances

In hindsight, this paper would have been good to read in 2006. His advice is pretty expensive (only $497 a year) these days at www.richebacher.com

Parenteau's 2006 Levy Institute Paper (short version)



Moving closer to present time, here is a March 2010 article by Mr. Parenteau wherein he discusses the three sector financial balances approach. I find this conceptual framework important, possibly essential to understanding international economics. I hope you enjoy reading it, too.



http://www.nakedcapitalism.com/2010/03/parenteau-on-fiscal-correctness-and-animal-sacrifices-leading-the-piigs-to-slaughter-part-1.html

Balance Sheet Recession Explained

This is also an introduction to Rob Parenteau.

Volatility Futures & Options

Essentially retweeting this from Only VIX blog. Interesting link.

Volatility Futures & Options

Read What Congress Should Be Reading This Weekend

What did Treas Sec Geithner say about China exchange rates, etc.

Report to Congress on International Economic and Exchange Rate Policies

On Fortune's cap we are not the very button. --Shakespeare

CAD: Another Blowout Employment Number | Kathy Lien | FX360.com

The good news on the Canadian job front supports the recent IMF forecast of the continuing global recovery. Which way is Fortune's wheel turning?

IMF Survey Magazine from July 8

Five Year Crude Chart and CRB Chart

Below is a link to the CRB Index chart for 5 years.

http://www.barchart.com/chart.php?sym=%24CRB&style=technical&p=WO&d=X&sd=&ed=&size=M&log=0&t=CANDLE&v=0&g=1&evnt=1&late=1&po=1&o1=%24WTIC&a1=on&o2=&o3=&x=35&y=12&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump


Here is a link to the Federal Reserve's statement regarding M3 issued March 9, 2006


http://www.federalreserve.gov/releases/h6/discm3.htm


What James Turk says appears in a blog

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/7/8_James_Turk_-_Threat_To_The_US_Dollar.html

His concern about M3 no longer being reported is that it makes it hard to compare the numbers to those of the early 1930s. He further complains that Eurodollars, a major M3 component, is particularly difficult to model. While this may be true, it is not relevant to the 1930s because at that time there were no Eurodollars. So how would this number be helpful?

His statistical evidence for inflation is misleading, if not false. Please compare his statements about oil prices and CRB Index with the historical information in the charts above. He fails to mention that oil prices are about 50% lower today than they were at their height, a few months before he started his comparison.

James Turk, founder of goldmoney.com, may be a good gold and silver salesman, but his statistical arguments are not cogent.

HARPEX Container Freight Index

HARPEX Container Freight Index

Despite a 30 day decline in the Baltic Dry Index, the container freight index is rising.

Collin Twiggs had this to say about the rising container index and steel prices today

"This leads me to believe that steel (?) (iron ore and coal?) stockpiled during the worst of the financial crisis is now being used for production, resulting in a down-turn in imports without a corresponding fall in manufactured exports — which remain in a healthy up-trend."

Gmail - Trading Diary: Commodity Exports Fall While Manufactured Exports Rise - jubjub59@gmail.com

Gmail - Trading Diary: Commodity Exports Fall While Manufactured Exports Rise - jubjub59@gmail.com

Search for meaning

I like these video clips of Viktor Frankl.

http://www.youtube.com/watch?v=fD1512_XJEw

http://www.youtube.com/watch?v=v0GWA7xzCa8&NR=1

Economics

A nameless razor fusses.

Today the minutes from the Federal Reserve’s last monetary policy meeting confirmed that central bank officials are in no rush to tighten monetary policy and raise interest rates. According to minutes, central bank officials believe that the economy is moving in the right direction with economic activity expanding at a moderate pace in early 2010.

President Obama Moves Early to Reappoint Bernanke

President Barack Obama on Tuesday announced plans to keep Federal Reserve Chairman Ben Bernanke in his job for another term.

I'm glad. Daniel K. Tarullo is not ready for prime time, in my humble opinion. Despite the opportunity the President had to appoint his own man to this hotseat of power, he chose a greater good. The cachet of credibility.

Introducing Daniel K. Tarullo

When Bernanke's term ends in January, will Obama replace him or keep him?

Although I think it would be better to keep him on, since he is a known quantity in these turbulent financial times, I think Obama will find it very difficult not to put his own stamp on a power position he has a chance to appoint. Since the federal reserve chairman has a term of 4 years, appointed by the president, and subject to Senate confirmation, Obama may not get another chance to make this change. (Although he is sure he will serve a second term at this point.)

If you recall, President Bush brought Bernanke in to serve as his chairman of his Council of Economic Advisors for awhile before deciding on him to replace Alan Greenspan. Bernanke was a governor of the Federal Reserve at the time. Obama's council has no FRB governors on it.
http://www.whitehouse.gov/administration/eop/cea/members/

The president must choose from sitting governors of the Fed. That limits his choice to the following list. Donald L. Kohn, the current vice chairman, Kevin M. Warsh, Elizabeth A Duke, and Daniel K. Tarullo. Although Bernanke would no longer be the Chairman, he would still have the rest of his 14-year term as a governor to serve. So he would still be there in the woodwork.



http://www.federalreserve.gov/aboutthefed/default.htm


Daniel K. Tarullo is the ringer on this board of governors. He took office on January 28, 2009. He is a law professor from Georgetown. He held several senior positions in the Clinton administration. Before that, he served on the staff of Senator Edward Kennedy and practiced law in Washington, DC. He also taught at Harvard Law School and was a visiting professor at Princeton. Not any experience as a central banker. He is Obama's man. But surely not, you say.

Time will tell.

Trading is Like Starting a Fire with Flint & Steel

Trading Forex or futures markets is like starting a fire with flint and steel. A lot depends on your kit and your skill, but a lot depends on the elements. What you have in mind is building a nice fire. That would be a healthy winning trade. Striking your flint and steel together would be taking a position in the market. The tinder would be the amount you are willing to risk on the trade. The kindling would be having your trade go in your favor by the amount of your risk capital (tinder). A log would be the trend. Getting the logs to burn comes about by catching the trend and riding it.

The day-trader is always concerned with striking his flint with the steel and not getting burnt. Sometimes it seems to be raining or windy or both. You don't get much started. The experienced fire starter looks for the best kindling and tinder. Patiently waits for his trade to set up. The impatient one keeps burning tinder and char cloth but all too often the fire dies. Fire starting is a survival skill that can be learned. A forex trader who approaches the market as a problem in fire starting could do worse. We trade our beliefs about the market.

Watch the Markets

I don't know of any substitute for watching the market. When you take your eye off, you might as well be unconscious. But with 24 hour markets, this is not easy. Picking your hours of alert watching is an important choice. You have to decide what you can live with. Some people only look once a week, trading from the weekly charts. Some try to watch every tick for 10 hours in 15 markets simultaneously.

Being committed to certain markets is an important key. My current thinking is that I need to watch 4 to 6 markets intensely from about 6AM EST to around 3PM, with glances at a bunch of others. I give my most intense attention to oil, namely the July Crude Oil Futures contract and the USD/CAD forex pair. My next favorite are the Treasury Bond and 10-year Treasury Note markets. Then comes S&P500 e-mini and a few others.

The commitment is to a continuous monitoring of the market. For me there are emotional reasons why I find this difficult. When I trade, I am emotionally involved. When I close a position there is a kind of emotional disconnect that occurs. Especially if I have a losing trade. I stop watching. But the battle still rages.

Watching the market has to be your number one commitment. Without that, you miss the moves. Orienting yourself to the trend must be a second important duty.